Meru in talks with online travel firms for booking tie up

Cab aggregator Meru Cabs’ chief executive, Siddhartha Pahwa, said the firm was in talks with two online travel agents to offer bookings through them.

“This could be an additional revenue stream for the company. We are trying to see if the arrangement could be worked vice versa,” Pahwa told the Business Standard.

According to sources, one online travel agent is MakeMyTrip.

Meru, which is competing with Ola and Uber in the taxi space, eyes 5,000 to 7,000 trips a day from this arrangement.

Action in the cab-aggregator space has risen after an acquisition of TaxiForSure by Ola, which is the largest cab aggregator in India. Ola is seen as a mass-market brand; Meru as premium. The latter recently launched Meru Genie, which is a cheaper variant of its regular services.

“We are perceived as a premium brand and a majority of our revenue comes from that segment. However, now we’re also looking at enhancing the pie of business segment seen as more mass market,” said Pahwa.

Meru had recently received fresh funds worth $50 million (Rs 300 crore) from its existing investor India Value Fund Advisors. Another $100 (Rs 600 crore ) million is expected to be infused by the end of April.

A major chunk of the new fund would be used for new tie-ups and expanding further into new cities. At present, Meru is operating in about 15 cities and it plans to have a presence in 40 cities by the end of FY16. “We want to be in major cities as the tier-II and tier-III market would still take some time to mature for cab aggregators,” said Pahwa, adding once that market starts maturing, it could well be the next big opportunity.

Meru has a fleet of 15,000 cabs. According to experts, cab services is a hyper-local model where building the supply chain takes a lot of time and investment. Hence, investors with deep pockets and long-term horizon will be able to sustain and see through the cash burn.

India’s current taxi market comprises 600,000 cabs and its combined yearly revenue is pegged at Rs 11,000 crore. According to Valoriser Consultants, the sector has been growing at 20 per cent annually.